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morning ahead of us today.

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We have four scheduled cases for argument and we have one case that has been submitted on the briefs.

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Our first argument is 1 sub C IP limited versus FMC Technologies Inc.

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case number 17-2437.

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Mr. Slayton, you're reserving five minutes of your time for rebuttal, correct?

[00:00:35] Speaker 01:
Yes, Your Honor.

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All right, you may proceed.

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May it please the court?

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Bruce Slayton on behalf of 1 Sub C, IPUK Limit.

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In relation to the 018 and the 435 patents, Appellate 1 Sub C will rest on his breeze in return to this opening argument.

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I'll first address the board's erroneous finding that claim one of the 893 patent is anticipated by Kelly.

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Notably, there is no dispute in this appeal regarding the teachings of Kelly.

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The entire proceeding was governed by the petitioners and the board's position that Kelly's line 24 was the claimed production flow line.

[00:01:14] Speaker 03:
There's an alternative rejection in this patent too, right?

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Kelly plus Anderson.

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Yes, Your Honor.

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So you have to prevail on both of those grounds of unpatentability.

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Yes.

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True.

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In fact, I could skip to the second theory if you're more interested in that.

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That's the one I'm a little more concerned about from your perspective.

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So I'd like to hear what you have to say, given that, as I understand it, the proposed grounds of unpatentability would just use all of Anderson

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Assembly the connectors and then use all of that and instead of connecting it to a wellhead connecting it to a subsea tree Is that the theory?

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and so therefore there would be didn't direct connections between the connections and an Anderson's assembly Because that's what is in fact shown in it's a little different That but let me let's go through and I think it'll come evident to you but I would state at the outset just to

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tee up this issue a little bit, what you're getting to is the mountable limitation and this connection.

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And in fact, in terms of the bigger picture, neither Kelly nor Anderson teach a module mountable to a production flow line.

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And the petitioner, neither the petitioner nor the board found that Anderson teaches that they're mountable.

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Consequently, if this court finds the preamble as a limitation, then reversal is straightforward and appropriate.

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If not, then we believe there's other grounds for reversal as well but to address your your Question your honor.

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I'll go to the second obvious theory so a Pelley asserts that the board found claim one obvious under the ledge second theory According to Apple II that theory teaches Kelly's module 26 is replaced with Anderson's module 83 a Pelley is wrong the board did not and could not adopt Apple II second theory and

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For example, if the board adopted the alleged second theory, then the board's findings regarding the other limitations of claim one would have to be consistent therewith.

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And they're not.

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For example, for teaching the first limitation of claim one, that is the assembly mountable to a subsea tree and to a subsea production flow line, the board at appendix 109 and 115, citing the petition, only found, and I quote,

[00:03:42] Speaker 00:
As evident from Figure 1 referring to Kelly, the choke assembly 26, that's Kelly's assembly, is capable of being mounted and is therefore mountable to a subsea tree in a downstream production flow line via Collet Body 22, which is also Kelly.

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In fact, in Appendix 108, the board found that Collet Body 22 is part of Kelly's tree.

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Thus pursuant to the board's only obviousness finding for the first limitation of Claim 1,

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The board found Kelly's module was not replaced, but remains and is mountable to Kelly's collet body 22.

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And the board did not also find Anderson's module 83 is mountable to Kelly's tree and the production flow line via collet body 22 or any other structure.

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And I guess I'm trying to understand why wouldn't we just

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Why wouldn't the theory just be you use all of Anderson's assembly 83, and then its connectors 180 and 84, and that connector 84 just goes straight into the subsea tree that's disclosing Kelly?

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The issue is not on the left-hand side of the tree, Your Honor.

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The issue is on the right-hand side.

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So we're not aware of it.

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What I just described, why isn't that the claimed invention?

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Because the subsea production flow line

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The module is not mounted on the subsidy connection flow line.

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It's merely connected.

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And I would add that the petition didn't assert that in this petition.

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So it's not a ground available for the board to adopt.

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Because petitioner advanced no argument in the petition that Anderson module was amountable to a tree and to a production flow line via Kelly's collet body 22 or any other structure.

[00:05:29] Speaker 03:
Well, you're talking about Kelly's collet structure 22.

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But my question is more, forget about Kelly's collet structure 22.

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Just look at Anderson and that self-contained unit to the right of its wellhead.

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and now take all of that and using connector 84 of Anderson, just connect that to Kelly's subsea tree.

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But the invention is directed to and the claim claims that the module is mounted to the tree and the production photo line together.

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This is about a plug and play module that lands on

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the tree and the production flow line.

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And when you remove it, it's detached from both.

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It's not detached from one at a time.

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In fact, we wouldn't want to do what Anderson is teaching.

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It's actually cumbersome because the flow line is attached separately to the end of the module.

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In the invention, the module is attached simultaneously with both.

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And if you remove the module, it's disconnected from the production flow line and the tree.

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And the petition doesn't support a different theory.

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The petitioner did not set forth an argument that Anderson's module was mountable to a subsea tree and a production flow line.

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That's nowhere in the petition.

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And therefore, that's my position, is that the board could not have adopted that position and didn't adopt that position because it wasn't available under Magnum Oil Tools.

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This court under Magnum Oil Tools stated that

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The board cannot adopt a position that the party did not advance in the petition.

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Here, the petitioner didn't advance.

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an argument that Anderson met the limitation, the Anderson module, excuse me, met the limitation of being mountable on the subsea tree and the production flow line.

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The petition at ground 2, 1.0 only set forth choke module, choke assembly 26 of Kelly on Kelly's cut-up body 22.

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So the only theory in the petition

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which the board adopted at 109, appendix 109 and 115, is through via Colette body 22.

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Colette body 22 remains in all embodiments.

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There's no getting rid of it.

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For example, if the board adopted the second theory, what happened to line 24 and Colette body passage 66?

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What was the modification to that?

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It's no longer there.

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The board didn't address that because that theory was not available to the court, to the board under the petition.

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And I'd also point out that the adoption of the second theory would be inconsistent with another finding of the board on another limitation of claim one.

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That is the production flow line connector limitation.

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There the board found, at appendix 114,

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Kelly modified to incorporate Anderson's connectors 3484 meets the limitation.

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Incorporation of connectors.

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The board did not find Kelly modified by replacing Kelly's module 26 with Anderson's module 83 meets the limitation.

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And based on the petition, as we just discussed, underground to 1.0, the board couldn't adopt that.

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All

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Embodiments in the petition upon which the board could adopt and advanced by the party were through Kelly's module 26 connected to Kelly's color body 22 which led to which we've argued about line 24 attached the color body 22 There is no other embodiment where the can you identify where in the petition that theory which we'll call ground number two is

[00:09:30] Speaker 03:
plus Anderson, where the combination requires retaining Kelly's colic body 22 and those lines 20 and 24 in the combination where you're using Anderson's assembly 83 in combination with Anderson's connectors 180 and 84.

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Well, 4791 are the appendix in the petition.

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Ground two, 1.1, incorporates

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Ground 1, 1.1, and Ground 1 was the anticipation theory, which was based on Kelly alone.

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So they incorporated by reference what the finding I just read, which is, excuse me, Your Honor, as is evident from Figure 1 referring to Kelly, the choke is sitting at 26.

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What page of the petition?

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4791.

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4791?

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Yes.

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So it refers back to 4780.

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So it says, seed ground, they incorporated by reference.

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For an assembly mountable to a sub-seed tree and a sub-seed production flow line, it states seed ground 1, 1.1 supra.

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That is the ground 1, the anticipation theory relying only on Kelly.

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So the only thing to support the prior art meeting that limitation is Kelly's module 26.

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It remains.

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And color body 22 remains.

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The entire claim is built upon that.

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It can't be the choke assembly 26 and color by 22 meets the first limitation of claim one, and then it switches below in module 26 and color body 22 and no longer there.

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We'd have to be consistent with it.

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Do you argue that to the board in your app donor response or in your blue brief to us?

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We argued that the board did not adopt the second theory, and I'm backing up the reason why it didn't adopt the second theory.

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This is an additional reason.

[00:12:00] Speaker 03:
That's what I remember, that you argued that they only adopted a 102 theory and not a 103 theory.

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I don't remember you arguing in your blue brief that the 103 theory would be flawed because of something related to the preamble in your blue brief.

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We were arguing that in the first instance that it was only the first obvious this theory that was adopted, which is Kelly module 26 remains and it's modified to add two connectors to it, separate connectors that Anderson.

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Right.

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The second theory that came out of the briefing, uh, from the red brief was that, Oh no, that's not the only obvious theory.

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There's another one.

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And we argued that the board didn't adopt it for a variety of reasons.

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And I'm citing this for additional reasons of why.

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the board did not adopt it.

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We can't review something that wasn't adopted.

[00:12:55] Speaker 01:
You're pretty much into your rebuttal time right now.

[00:12:58] Speaker 01:
I did have a question with respect to the 893 pan and this goes to the arguments that you're making.

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To what extent are your arguments based on that the claims require a direct connection?

[00:13:11] Speaker 00:
they're not based on direct connection.

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The parties have moved past that and... So you agree that you waived, that's not an issue?

[00:13:19] Speaker 01:
I agree it's not an issue, Your Honor.

[00:13:21] Speaker 01:
Okay, great.

[00:13:22] Speaker 01:
All right, well then, do you want to save the rest of your time for rebuttal?

[00:13:24] Speaker 01:
Yes, Your Honor.

[00:13:25] Speaker 00:
Okay.

[00:13:25] Speaker 00:
Yes, Your Honor.

[00:13:35] Speaker 02:
Good morning, and may it please the Court, Indy McCourgy of Fish and Richardson for FMC.

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So what we're wrestling with this morning is a waived theory that then somehow takes issue with the fact finding that the board did.

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And so I've got to go through and correct some of the statements.

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Your colleagues have said that they agree that the direct connection argument

[00:13:59] Speaker 02:
That's that's been addresses having been waived was waived, and it's not an issue I heard mr.. Sladen say that and I'm heartened to hear that Because I think the entire mountability argument that he was trying to make that wasn't in the briefs is based on that direct connection So if we have agreement on that and they're with us, then I think that argument is taken care of

[00:14:20] Speaker 02:
The Anderson plus Kelly theory that was asked about, I think what may be most useful for the court, unless the court tells me otherwise, is to simply go to the board's final written decision and see what they did.

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Because I think that lays out the analysis.

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And so if we go to that decision, which starts on appendix 89, and specifically if we move to appendix 112, what we see is that

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The board recognizes that FMC had argued, I'll call it, two flavors of combination invalidity based on Kelly plus Anderson.

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The first combination was taking the connectors of Anderson and swapping it into Kelly.

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And this is at appendix 112, Your Honors.

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The second flavor was taking Anderson, the module in its entirety, including the connectors, and swapping it in.

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So what the board says is,

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Talking about that second flavor, and I didn't see this in one subsea's briefs.

[00:15:20] Speaker 02:
I'll bring this to the court's attention It's swapping in Anderson so as to include Anderson's arrangement of connections at opposite sides of the module ie connectors 84 18 on page 24 of the opinion appendix 112 Yes, around appendix 112 page 24 of the actual decision

[00:15:41] Speaker 01:
And where in the middle of the paragraph, you've got to point me to where you're at.

[00:15:45] Speaker 02:
It is the end of the first full paragraph, Your Honor.

[00:15:48] Speaker 02:
OK.

[00:15:48] Speaker 02:
All right.

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And then, so in that first paragraph, the board lays out what the two flavors of obviousness are.

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Then it moves to the second paragraph and says, we agree with FMC that a skilled artisan would have recognized the benefit of modifying Kelly's retrievable module to incorporate Anderson's teachings of separate and independent connectors for the module.

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That is the common thing that's in both flavors of Anderson plus Kelly in validity.

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It's the connectors.

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So what the board is saying here, and it's making a fact finding, of course, it's looking at it from the perspective of one of ordinary skill, is that it's the connectors that really matter, whether you swap in the whole module or just the connectors.

[00:16:29] Speaker 02:
And then the board takes that,

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in the subsequent page and says, in other words, using Anderson's separate and independent connectors would permit the unseen production flow line in Kelly to be disconnected from the module without also having to disconnect the module from the tree.

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And so what is that saying?

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It's saying that once you swap in Anderson's connectors, it's connecting directly to this flow line.

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And we don't have this direct debate anymore, and again, I'm glad to hear that.

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board is saying you swap in Anderson and all of this direct business goes away.

[00:17:03] Speaker 02:
So that is Anderson plus Kelly.

[00:17:06] Speaker 01:
I heard Mr. Sladen say something about, well... So to what extent does the argument you just made implicate the direct connection argument?

[00:17:14] Speaker 01:
You're saying that's exactly what this is, right?

[00:17:17] Speaker 02:
So the direct connection argument, it's a little bit tricky in that

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It was never made below, and so we're doing this a little bit on the fly.

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If we were still debating the direct connection issue, the argument would have been that the little pipe section 24, is that replaced in the second flavor of Anderson plus Kelly when you swap in the connectors?

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And if you go to Anderson, and you look at, I think it's element 180,

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you see that the connection would be directly from Anderson's connector to the production flow line.

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So if there were some direct debate, which there is not apparently, that debate would be sort of vitiated by the combination of Anderson plus Kelly.

[00:17:59] Speaker 03:
But I guess the patent owner believes that your proposed combination of Kelly plus Anderson still retains the collet body 22 in lines 20 and 24 from Kelly in the combination of Anderson and Kelly.

[00:18:12] Speaker 02:
Is that right or is that wrong?

[00:18:15] Speaker 02:
Well what the board said, and I didn't mean to speak over your honor, what the board said is you swap it in and when you look at what the swap is sort of going back to our petition you see that in fact that line 24 disappears.

[00:18:26] Speaker 02:
So Anderson's connector goes directly to the production flow line if I understood the question correctly.

[00:18:32] Speaker 03:
So you

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believe, the board believes that lines 20, 24, and call it body 22 are not part of the combination when you combine Anderson and Kelly when you use Anderson's assembly 83.

[00:18:44] Speaker 03:
That's correct.

[00:18:45] Speaker 03:
In substitution of Kelly's choke assembly.

[00:18:49] Speaker 02:
Yes, Your Honor.

[00:18:53] Speaker 03:
But I guess the patent owner is pointing to something in the petition that suggests otherwise in its view.

[00:19:00] Speaker 02:
I wasn't entirely sure what

[00:19:03] Speaker 02:
the patentee was pointing to, if we go back to the petition, and I'm happy to do this for the court's benefit, if the court would like, what you see is that, of course, it's a combination of Kelly plus Anderson.

[00:19:14] Speaker 02:
And so when the petitioner is talking about the preamble, the mountability, all that, you look at the combination, and Kelly, in fact, was addressed squarely in the petition.

[00:19:27] Speaker 02:
That preamble section was addressed squarely.

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And what's interesting is that,

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One subsea never took any issue with it.

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So when they filed their patented response, there's nothing in there that says, oh, no, FMC is reading the preamble incorrectly.

[00:19:39] Speaker 02:
And we think it is a limitation.

[00:19:41] Speaker 02:
It should be read this way and so on.

[00:19:43] Speaker 02:
And that's where the waiver argument creeps in.

[00:19:48] Speaker 02:
May I continue?

[00:19:53] Speaker 02:
Wasn't entirely sure for Mr. Slayton's argument whether the Kelly anticipation ground is still in play or not.

[00:20:01] Speaker 02:
So I'll just step through briefly.

[00:20:03] Speaker 02:
There are three elements that one subsea says are missing from that.

[00:20:08] Speaker 02:
And I think we're quite comfortable resting on our reefs on those three elements, unless the court has specific questions.

[00:20:17] Speaker 02:
Thank you, Your Honor.

[00:20:24] Speaker 00:
Your Honor, I want to make sure that when I responded to your question on whether direct connection is still at issue,

[00:20:30] Speaker 00:
I want to make sure we're understanding that I wasn't waiving the anticipation arguments or other obviousness arguments.

[00:20:36] Speaker 00:
I'm just saying that we understand the claim when read.

[00:20:39] Speaker 00:
It could allow for some intervening parts.

[00:20:42] Speaker 00:
And that's what I was saying, that there's no longer a disputo.

[00:20:45] Speaker 00:
And I want to make clear that I didn't waive my arguments.

[00:20:50] Speaker 00:
A few points to the comments.

[00:20:52] Speaker 00:
Number one, during the entire proceeding, line 24 was the production flow line in the petition.

[00:21:00] Speaker 00:
in the institution decision, during the all discovery, and then finally in the final written decision, all of a sudden it's not.

[00:21:09] Speaker 00:
It is the part of Kelly's tree.

[00:21:12] Speaker 00:
So this waiver argument is particularly egregious because we went through the entire proceeding with line 24 being the

[00:21:22] Speaker 03:
That's fair to say, because I understood the petitioners' reply to make it pretty clear that they were pointing to Lines 20 and 24 as being part of Kelly's tree.

[00:21:31] Speaker 03:
And then you asked to file a cert reply, which was granted, and you addressed other arguments, but you didn't address this argument in your cert reply, nor did you argue anything during the oral argument before the board about this question of what did Lines 20 and 24 represent in Kelly?

[00:21:49] Speaker 01:
And this is a waiver issue I brought to you.

[00:21:54] Speaker 00:
If you're disavowing a position, you want to give notice to the patent owner, I think you would use the claim term at issue.

[00:22:03] Speaker 00:
If you review the reply, they never once use the term production flow line.

[00:22:09] Speaker 00:
That's not in the petition in the reply at all.

[00:22:13] Speaker 03:
You're saying they didn't refer to lines 20 and 24 in their reply as part of the subsea tree?

[00:22:20] Speaker 00:
No.

[00:22:20] Speaker 00:
I'm not.

[00:22:21] Speaker 00:
No, Your Honor.

[00:22:21] Speaker 00:
I'm sorry.

[00:22:23] Speaker 00:
What they did, the best they did in the reply is that it's both.

[00:22:28] Speaker 00:
That they said while there are flow lines, they're also part of the tree.

[00:22:32] Speaker 00:
So they had a little evolution of their position.

[00:22:35] Speaker 00:
In the petition, it was a production flow line.

[00:22:37] Speaker 00:
Expert testified it was a production flow line.

[00:22:41] Speaker 00:
Went through all discovery production flow lines.

[00:22:43] Speaker 00:
At the reply at the last minute, they say, no, it's not the production flow line.

[00:22:49] Speaker 00:
It's the tree.

[00:22:50] Speaker 00:
And then turn that back around on us and say, now you can argue the arguments you would have made originally when line 24, if it would have been line 24, it would have been the tree to begin with.

[00:23:00] Speaker 00:
We would have made different arguments, Your Honor, and that's our position.

[00:23:04] Speaker 00:
Waiting to last minute in the late of the proceeding at our reply seems particularly unfair, even if it gave us notice.

[00:23:11] Speaker 00:
I don't believe it did.

[00:23:16] Speaker 00:
But it wasn't clear to us that they were completely disavowing their position.

[00:23:22] Speaker 00:
They never actually use the term production flow line in the reply.

[00:23:26] Speaker 00:
I think if you're disavowing a position that you've taken for the last year and a half

[00:23:29] Speaker 00:
through the entire proceeding and your experts never disavowed it, then it's not waiver.

[00:23:36] Speaker 00:
I mean, it seems to me that we shouldn't be foreclosed to making the arguments that would have been relevant during the entire proceeding if their position was that line 24 was part of the tree instead of the production flow line.

[00:23:49] Speaker 01:
I think we have your argument.

[00:23:52] Speaker 01:
Thank you very much.

[00:23:58] Speaker 01:
Our next case is